Apple Inc. has implemented reductions in the daily spending allowances for its engineering teams utilizing internal AI tools, according to recent reports. In October, the company lowered the daily cap for some engineers from $300 to $200. Further reductions are anticipated, with some engineering teams potentially seeing their daily limits drop to $100. Non-engineering groups, many of which already operate under a $100 daily cap, could experience even steeper cuts, with some allowances potentially falling to $25 per day. Employees requiring higher budgets for their work will be able to seek exemptions from senior leadership.These budget adjustments are part of a wider cost-cutting initiative spearheaded by Apple CEO John Ternus, who assumed the role on September 1. Ternus is reportedly focused on streamlining operations and reducing management layers to enhance efficiency. The reductions in AI spending align with this broader mandate to control expenses.The budgets in question cover the cost of "tokens," the units of text and data processed by AI models. Providers of AI services typically charge based on the volume of tokens consumed, with more advanced models generally incurring higher costs. Complex tasks, such as writing and debugging software code, can consume a significant number of tokens, contributing to higher expenses. Apple allows its employees to use various third-party AI models, including Claude, ChatGPT, and Gemini.Internal reactions to these changes have been mixed. Some employees have indicated that few workers were consistently utilizing their full $300 daily allowances, suggesting the previous limits may have been overly generous. Others view the reductions as a signal of more extensive cost-cutting measures, fueling concerns about potential restructuring or layoffs. Apple has also engaged external productivity consultants for some divisions, which has further contributed to employee apprehension regarding possible organizational changes.Despite these internal budget cuts, Apple is simultaneously encouraging a broader adoption of AI across its workforce and products. The company's research and development expenditures increased by 32% in fiscal year 2026, partly due to rising infrastructure and AI-related costs. Overall operating expenses for Apple climbed 22% to $75.5 billion in the same fiscal year. Apple is also reportedly shifting its AI strategy towards on-device models, which run directly on user devices, emphasizing privacy and faster response times. This approach may reduce reliance on more expensive cloud-based AI systems.